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Crash Course in ... avoiding redundancies

The economic downturn has come home to roost; sales are down and there are worrying signs that they are about to fall off a cliff. It's only a matter of time before you have to think about making redundancies - but is there any alternative?

by Alexander Garrett

Published: 01 Sep 2008

Last Updated: 09 Oct 2013

Plan ahead. 'Try to envisage what talent you'll need in five or 10
years' time,' says Owen Morgan, head of commercial operations at HR
consultancy Penna. 'Workforce planning in sectors such as manufacturing
allows you to plan ahead for a temporary downturn in production.'
Offering fixed-term contracts where appropriate can also obviate the
need to make redundancies.

Stop hiring. 'There's a lot of movement in the job market, so you can
achieve a certain amount of saving through natural wastage,' says Mike
Emmott, employee relations adviser at the CIPD. 'However, clearly, you
need to have people in the right jobs, so you'll have to continue some
recruitment.'

Cut overtime. If you're in a sector where people are still paid
overtime, look at reducing or axing it to cut the wage bill.

Target temps. 'Agency and other temporary staff are usually taken on as
a lining for the fatter times,' says Ken Sharp, senior adviser with
Acas. 'If you want to keep your permanent, skilled people, look at cuts
in the temporary part of the workforce first.'

Look for volunteers. Offering voluntary redundancy should be standard
practice, but act with caution. 'If it's offered across the board,' says
Morgan at Penna, 'your more valuable people are often the confident ones
who go out and find a new job, so make sure you have had effective
career conversations so they know their value to the firm.' Make it
clear you'll have final say on who goes.

Discuss it. If you're laying off more than 20 people, there's a
statutory obligation to consult with employees' representatives. But
approach it as a genuine attempt to find out whether your people can
come up with ideas to avoid redundancies. 'People on the shop floor
often have ideas for savings that management has never thought of,' says
Sharp.

Redeploy. Part of your business may be faltering while another is still
growing. 'We often find a firm is letting individuals go in one area
while recruiting similar people in another,' says Morgan. 'There's a
need for joined-up deployment. Using existing employees can save on
redundancy costs and recruitment costs - you have somebody who
understands the culture of the business.'

Take a break. If you judge the downturn to be temporary, offer
sabbaticals, extended training or study leave as ways to cut the wage
bill while keeping the door open for individuals to return when business
improves. 'There may be long-serving people in your workforce who would
look forward to six months away from the business,' says Emmott. 'They
may return with new skills.'

Do say: 'At this difficult time, we are going to explore as many options
as we can to avoid making redundancies.'